Facing a $6 billion deficit, the US Postal Service is proposing new rules on first class mail delivery that will affect not only private letters, but the delivery of magazines and periodicals.
The U.S. Postal Service said a plan to save $2.1 billion a year and fend off possible bankruptcy would effectively put an end to almost all overnight delivery of first-class letters and postcards. Delivery would take at least two to three business days.
The postal service's decision to relax delivery standards for first-class mail follows its determination in September to close 252 mail processing plants, about half its total. Altogether, about 28,000 employees would lose their jobs.
David Williams, a postal service vice president, said Monday that the agency has little choice but to take drastic steps to reduce operating costs by $20 billion by 2015 in a bid to become profitable. It doesn't receive taxpayer funding, though it is subject to federal regulations and oversight.
The proposed changes to service standards would allow for "significant consolidation" of facilities, processing equipment, vehicles and the workforce, he said.
The cutbacks wouldn't affect Express Mail, which guarantees overnight delivery, or Priority Mail, which takes about two to three days. Those services are more expensive than a first-class letter, which costs 44 cents, with a 1-cent increase slated for January.
The move drew immediate criticism from some industry analysts, unions and members of Congress.
People are still under the mistaken impression that the Postal Service is funded by government despite the fact that it has been 40 years since that has been true. And this is not a case where private industry could step in and do a better job. There is no way that Fed Ex or UPS could make a profit by delivering mail in many rural areas for 44 cents a piece.
This article in the Atlantic on what killed the Postal Service is well worth reading. The answer is the internet, labor costs, and Congress:
In the days of yore, sending letters by mail was pretty much the most efficient way to communicate in writing. Then the Internet happened. Although total mail volume stayed relatively steady until 2006, it has dropped an astonishing 20 percent in the past five years. More important, first-class mail, the Postal Service's biggest moneymaker, has fallen 25 percent during the past decade. That's a huge problem for its bottom line. The agency now delivers far more "standard mail" -- what most of us call junk mail -- than first-class mail. According to Businessweek, it takes three pieces of junk to equal the earnings from a single stamped first-class envelope. J. Crew catalogs and pizza menus alone won't pay the bills.
Yet even as its profits have dwindled along with the mail it handles, the agency's labor costs have remained stubbornly high. Salaries and benefits make up 80 percent of the Post Office's budget. By comparison, FedEx spends 43 percent of its budget on labor, while UPS spends 63 percent, according to Businessweek. Why the disparity? As the magazine put it, "USPS has historically placed the interests of its unions first." For years, it has happily negotiated contracts with generous salary increases and no-layoff clauses.
The Postal Service as we know it today was created in 1970. The Postal Service Reorganization Act was intended to transform the mail system from a dysfunctional dumping ground for political patronage into a self-sustaining, independent agency. It was told, in other words, to act like a business.
But the politicians never really let it. The Postal Service doesn't receive any taxpayer dollars, funding itself entirely through customer revenue. But it still has to deal with Congress as a micromanager. It isn't allowed to shutter post offices for purely economic reasons, meaning that roughly 25,000 of its 32,000 now operate at a loss. It needs permission for rate hikes from a special regulatory commission. And for 30 years, it's been required to deliver mail on Saturdays, even though that day is a money loser.
With Saturday delivery already on the chopping block, these proposed changes in mail delivery couldn't come at a worse time. For those dwindling number of Americans who rely on the Postal Service for the delivery of checks, of medicine, bills, and dead tree publications, the search for alternatives will continue.